Germany and France postpone economy talks at last minute

Talks planned for Monday between French President Nicolas Sarkozy and German Chancellor Angela Merkel on the thorny issue of European economic governance were postponed at the last minute due to “scheduling reasons”, amid recent bilateral tensions.

AFP- Planned talks Monday between French President Nicolas Sarkozy and German Chancellor Angela Merkel were abruptly postponed due to scheduling problems, officials said, amid tension between the two allies.

The meeting, planned to discuss the controversial topic of European economic coordination ahead of a crunch European Union summit on June 17, will now take place on June 14, Merkel's office said, blaming "scheduling reasons."

French diplomatic sources said that the rare postponement of such high-level talks came at Germany's request.

Explaining the move, German government officials said there was insufficient time for the leaders to meet, with Merkel holding crunch domestic political talks about new budget cuts and that this had been agreed with Paris.

However, the run-up to the planned talks with Sarkozy was marked by disagreements between the two European powerhouses, after frequent clashes over multi-billion-euro (dollar) bailout packages for Greece and then the wider eurozone.

Paris had blamed Berlin for dragging its feet over a near trillion-dollar plan drawn up to prevent Greece's fiscal woes from spreading to other vulnerable countries, saying that it pushed up the price of the package.

French officials grumbled that in January the rescue plan would have cost 15 billion euros, versus the around 750 billion euros that were ultimately earmarked.

Moreover, when the plan was eventually agreed, Sarkozy announced to the press that it was "95 percent French," a claim that set off gnashing of teeth in Berlin.

Other rows over economic policy, notably a plea by French Finance Minister Christine Lagarde for Germany to reduce its reliance on exports and boost domestic demand to help the rest of the euro area, added to the tensions.

In February 2008, Paris and Berlin called off two sets of high-level talks within a week, following a diplomatic spat over French plans for a new Mediterranean Union that would exclude Berlin.

At that time, both sides blamed diary clashes.

The main topic on the agenda of Monday's talks was to have been European economic governance.

Sarkozy has called for a European "economic government" complete with a dedicated eurozone civil service setting policy for the 16 countries using the euro.

Merkel firmly rejects such proposals, concerned about the independence of the European Central Bank.

"The old arguments around economic coordination are there again, but this time, the stakes are enormous" for Europe, Frank Baasner, director of the Franco-German Institute in southwestern German city of Ludwigsburg, told AFP.

Earlier, Sarkozy's office had sought to play down strains in the "Franco-German motor" of European integration before the EU summit and a meeting of the Group of 20 later this month.

"The Franco-German motor is working. For the past three years, it has been present at all the meetings," said a French official.